New West, L.P. v. City of Joliet

Appeal
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 05 C 1743 -
Charles R. Norgle, Judge.

Before
Easterbrook, Sykes, and Barrett, Circuit Judges.

Easterbrook, Circuit Judge.

This is
the fourth published appellate opinion in a long-running
dispute between New West and the City of Joliet. New West
filed this suit in March 2005, contending that the City had
interfered with the way in which it set rents at the
Evergreen Terrace apartment complex under the national
government's mark-to-market program for rates at
subsidized apartments. New West also contended that the City
was violating the Fair Housing Act (FHA), 42 U.S.C.
§§ 3601-31, and many other rules of state and
federal law. Our first decision held that these claims belong
to New West, not its renters (as the district court had
held). 491 F.3d 717 (7th Cir. 2007).

In
October 2005 the City filed an eminent-domain suit in state
court, proposing to acquire the complex, raze it, and add the
land to an existing public park. New West removed the action
to federal court, where the Department of Housing and Urban
Development joined it in contending that a recipient of
federal financing is immune from the power of eminent domain.
Our second decision rejected that contention and directed the
district court to resolve the condemnation proceeding with
dispatch. 562 F.3d 830 (7th Cir. 2009).

More
than three years later, the condemnation trial began. It ran
100 trial days over 18 calendar months. The judge found that
Joliet is entitled to take ownership of the apartment
complex; a jury then set the amount of just compensation at
about $15 million. Our third decision affirmed the final
judgment. 825 F.3d 827 (7th Cir. 2016). The trial lasted so
long in large part because New West contended that
condemnation would violate the Fair Housing Act. (New West
relied on 42 U.S.C. §§ 1982 and 1983 in addition to
the FHA; we refer to its theories collectively as the FHA
claim.) We held that New West had not shown a violation.
Id. at 829-30. New West predicted that the judge
would use the result of the condemnation suit to block its
pending suit against the City, thus violating the Seventh
Amendment by depriving it of a jury trial. We replied that
this contention was unripe and should be presented later if
New West's prediction proved to be true. Id. at
830-31.

It did
prove to be true. The district judge dismissed New West's
suit as barred by the preclusive effect of the final decision
in the City's condemnation action. New West then took
this appeal. It concedes that ordinary principles of issue
preclusion (collateral estoppel) prevent relitigation of the
FHA claim. But New West contends that, under Dairy Queen,
Inc. v. Wood, 369 U.S. 469 (1962), and Beacon
Theatres, Inc. v. Westover, 359 U.S. 500 (1959), the
Constitution entitles it to a new trial anyway, lest the
judgment in a bench trial displace the jury's
constitutional role.

The
problem with New West's argument is that Parklane
Hosiery Co. v. Shore, 439 U.S. 322 (1979), held that
Dairy Queen and Beacon Theatres are not
constitutional decisions. They instead concern the exercise
of discretion to determine the order in which the issues
presented in a single suit are resolved. Judges usually ought
to put jury-trial issues ahead of bench-trial issues because
that order is most respectful of constitutional interests,
not because the Constitution commands that order. And it
follows, Parklane adds, that when issues arise in
separate trials, there is no constitutional problem with
using the first trial's outcome to resolve the second,
even if the first trial was to a judge. 439 U.S. at 333-37.

Parklane
entailed nonmutual preclusion: even though not a party to the
first suit, the plaintiff in the second claimed its benefit.
A majority of the Court concluded that offensive nonmutual
issue preclusion is both proper as a maler of common-law
development and consistent with the Constitution.
Id. at 326-33. Nonmutual preclusion is not at issue
in the dispute between New West and Joliet, making this case
easier than Parklane.

New
West does not deny that Parklane would be
dispositive if the condemnation suit had been resolved by a
state court. If the suits had been in two judicial systems,
they could not have been coordinated. But because both suits
ended up in federal court, and before the same judge, New
West believes that the judge should have put the condemnation
action on hold while seling its FHA suit for a jury trial.

The
district court did not have that discretion. We directed it
to resolve the condemnation suit first, because the City
professed concern about ongoing crime and deterioration at
the apartment complex. The FHA suit could be deferred because
it deals only with how accounts are selled among the
adversaries-and if New West prevailed in the condemnation
action it probably would not be necessary to resolve the FHA
claim at all.

New
West's current problem is of its own making. It concedes
that the FHA was not a compulsory counterclaim in the
condemnation suit. New West's lawyer asserted at oral
argument that it presented the FHA arguments as defenses to
the City's suit because it was afraid that, otherwise,
the judge would have deemed them forfeited or waived.
That's inconceivable. This suit began six months before
the condemnation action; nothing in it has been forfeited or
waived. When New West imported its FHA claim into the
condemnation action, Joliet protested, asking the judge to
rule that the FHA has no place in an eminent-domain action.
Joliet thus waived any argument that the FHA theories had to
be presented as defenses in the City's suit. New West was
free to reserve the FHA claim for this suit, where it would
have been entitled to a jury trial. Its FHA claim was
resolved in a bench trial only because New West insisted on
presenting it there.

The
condemnation action could have been resolved speedily by
leaving the FHA claim to this suit. Once we held in 2009 that
federal financing did not block the use of state and local
eminent-domain powers, the condemnation claim could have gone
to trial with a simple question: Was the taking for a public
purpose? Then the FHA claim could have been resolved, by a
jury, in this suit. But New West wanted the FHA to be treated
as a defense to condemnation, and the district court
...

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